In a previous post, I discussed
supply chain and the complexity around defining it. It revolves around process
improvement for all activities that move your product or service from infancy
to the end-user as efficiently, safely, and cost-effectively as possible. Given
the definition, supply chain becomes a mindset more than a department within a
corporation. Its role in business is changing almost as quickly as the
technology that it thrives on. There is a drastic need in this ever-growing
field and a plethora of career paths and opportunities to choose from. Some areas
within include inventory management, merchandising, lean, demand planning,
sourcing/procurement, logistics, and category management and they work directly
with manufacturing, engineering, and finance to improve the business. Where
supply chain becomes even more exciting is when you have overlap and common goals between those departments. It can help the corporation drastically
as well as the career paths of its individual employees.

From my own experience, in wholesale, retail and consulting environments, I have found a direct correlation
between inventory management and sourcing and would go as far to say that
strategic sourcing can be considered the backbone of supply chain. The
analytical capabilities gained in inventory management can help in any role but
the strategy behind each move is key. When you consider forecasting, inventory
turns, service level, space/order management, and product flow you build a
basis for understanding the importance of budgeting and accountability. Often
times there will be tension with how to best capture sales but it is ultimately
the job of the inventory manager to promote sustainable growth.

This type of strategic capability
can be used throughout the sourcing
process as well; including data collection, research, RFx, negotiations,
contracting, implementation and continuous improvement. Although the most basic
functions within sourcing and inventory management can be tactical and tedious
on the surface, in a holistic light they can be strategic. The ability to
effectively negotiate the final stages of a sourcing initiative relies heavily
on integrity of the data from the beginning stages. The analytics around the
POS data in inventory management can be very similar to that of the cost of goods
or services data in a sourcing project. With that said, an argument can be made
that sourcing is the backbone of supply chain because the steps remain constant
from category-to-category, business-to-business. There will be more variability
between managing indirect vs. direct spend but sourcing, if done correctly, can
be used at any company in any industry.

Again, supply chain isn’t going
anywhere! Supply chain is a big bag of tricks and it’s best to see several of
the different pieces. You’d be surprised just how much interconnection there is
and how much easier change management becomes when you have prior experiences
to look back on. For the departments to work cross-functionally there must be
some commonality between them and understanding the point-of-view from many
will aid in the understanding of the supply chain in its entirety. A separate
part of the equation is understanding these concepts from several different business
sectors and consulting can be a great approach!

Strategic Sourceror

StrategicSourceror.com is a leading industry blog that focuses on providing news, tips, and best practices for a variety of procurement, supply chain, and strategic sourcing categories.

This site is owned and operated by Source One Management Services, LLC; the leading consultancy providing strategic sourcing resources, procurement advisory consulting and procurement support services to hundreds of companies.

Continue to visit StrategicSourceror for your supply chain and procurement news and to see the latest tips, advise, and rants from the analysts, consultants, and category managers from Source One.

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About Source One

Source One Management Services, LLC is a leading procurement services provider. Since 1992, Source One has been providing companies in all industries with sourcing services including BPO, Benchmarking, Spend Analysis, Category Support, and RFX Management.